WASHINGTON -- The Senate, voting largely along party lines, approved a bill that would tear down Depression-era regulatory walls separating banks, brokerage firms and insurers.

The 54-44 vote is a significant step toward financial-services reform, but the bill still has several hurdles to overcome. The House is still wrangling over its own version of the bill, which is at odds with the Senate version on several key issues. And although President Clinton says he supports an overhaul in principle, he has already threatened...